Insurtech & the Hospitality Industry: Improve Positioning for Renewals

October 28, 2020

By Kim Gore

The vast majority of the U.S. lodging industry is looking for any advantage as it fights to come back from the hits that have made 2020 a year most of us would rather forget. Operators need to get creative and explore resources that restore profits, transfer risk, improve insurance loss runs and boost revenue streams.

The growth in insurtech innovations has opened the door to a variety of possibilities. Insurtech companies like InsuraGuest, for instance, have stepped up with digital “gap” insurance products that are meaningful tools for transferring risk. A considerable proportion of a hotel operator’s claims come from small property or medical claims that are frequently applied to the general liability policy and drive up premium prices. By having guests pay the nominal fee per night for the “gap” insurance, the hotel’s risk for the small claims is transferred, and they are kept off the general liability policy.

Using Insurtech in the hospitality industry is a smart strategy to consider. Here are four reasons why:

  1. It’s an easy way to transfer risk. Using this form of “gap” insurance is a good way for the hotel to transfer exposures, to companies like InsuraGuest, that are small but frequent, involving claims for things like in-room property damage, theft, accidental medical and death and dismemberment incurred by guests.
  2. Better positioning for a tough renewal season. The risk transfer also will help the hotel lower its claim ratio and improve its risk profile – ultimately minimizing its loss run. This has been a tough year for hospitality, one of the hardest hit sectors by COVID-19. As the market hardens, carriers are tightening capacity and premiums are inflating. It’s this kind of move that makes a good story to sell the underwriters at renewal.
  3. Add to the revenue stream. Arrangements are typically set up so there’s fee sharing with the hotel operator. The per-room-per-night shared fee can add up and be a nice source of revenue.
  4. Gain another advantage in the guest experience. Imagine how satisfied a guest will feel when, after reporting an injury after a fall in the room, he is immediately told, “We are so sorry that happened, but we have a policy for that.” The clerk immediately logs into the online service, takes care of the details and the guest knows in real time what comes next. It’s far better than the “hurry up and wait” of typical claims processing.

These are tough times for the economy, and for the hospitality industry. But new ways to tackle old problems continue to emerge – posing big advantages for those that are ready to act.

HUB International’s team of brokers is available to help your hospitality organization understand and manage its risk and insurance concerns.